HM Brothers (P) Ltd. Vs DCIT (Madras High Court)
Madras High Court held that once the purchase of machinery itself was found to be false and the transaction was sham, the claim of depreciation cannot be sustained. Appeal dismissed, accordingly.
Facts- The appellant / assessee was trading in ball bearings. AO completed the assessment under Section 144 of the Act and the assessment order was passed on 19.03.1999, disallowing the depreciation claim on machinery.
The assessee preferred an appeal before the CIT (Appeals) and by order dated 18.07.2000, the appellate authority remitted the matter back to the AO on the ground that no material was brought on record by the AO to suggest that the assessee was not entitled for depreciation.
Post remittance, AO completed the assessment and passed the assessment order dated 05.03.2001 u/s. 143(3) of the Act. Again the assessee preferred an appeal before the CIT (Appeals) and the appellate authority by order dated 07.06.2002 allowed the appeal on the ground that the AO had travelled beyond the directions issued in the earlier order.
In the appeal preferred by the Revenue before the ITAT, the assessee had not participated in enquiry and the Tribunal, based on the records produced, by order dated 17.03.2009, allowed the appeal and restored the assessment order in respect of disallowance for depreciation claim on machinery. Assailing the orders passed by the ITAT, the assessee company had preferred the above Tax Case (Appeal).
